Rally continues following break of key resistance and stamp of approval from Fed. Stocks have been on the rise, albeit at a slow pace, but gains accelerated a bit following the FOMC statement Tuesday. The fact rates are expected to stay low for an extended period of time left traders in a buying mood and this led to a solid break of 1,500 on the S&P 500 (SPX). Nonetheless, volumes continue to be light, even with quadruple witching Friday and the CBOE Market Volatility Index (VIX) is sitting at a level that previously led to profit taking in January.

Overseas markets have followed the lead of the U.S. with stocks in Europe and Asia both higher. Gains in bank stocks are pushing shares in Europe to 2-month highs with the FTSE up half a percent in midday trading. Shares in Asia saw a much stronger rally with the Nikkei up 1.17 percent to an 8-week high. The Hang Seng index gained 1.72 percent with tech shares providing strength.

Producer prices fell 0.6 percent in February following a 1.4 percent gain in January. Economists were looking for a decline of 0.2 percent in producer prices. The core rate, which excludes food and energy prices, rose 0.1 percent, as expected. Year on year, the core rate is up just 0.9 percent, support the Fed's view that inflation is not a concern at the moment. Data on consumer prices are due out tomorrow with expectations for a gain of 0.1 percent overall and at the core.

Oil prices are higher Wednesday after the Saudi Arabia Oil Minister said oil prices are "beautiful." OPEC is meeting today is expected to leave quotas unchanged and this has pushed crude prices up nearly one percent near $82.50 a barrel. Unfortunately, these higher prices are leading to higher costs for gasoline at the pumps, which could surpass $3 a gallon in the near term.

Shares of CIT Group (CIT) are moving higher this morning following the release of its quarterly earnings. The lender lost nearly a billion dollars after adjustments thanks to high borrowing and credit costs. CIT filed bankruptcy last year, but has emerged and expects to be profitable this year thanks to new accounting rules. In related news, all the equity of the former CIT has been eliminated and the new fair value of the stock has been determined at $42 a share.

Jody Osborne
Senior Staff Writer & Options Strategist
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